Two months left for first-time buyers to save up to £15,000 in stamp duty
A first-time buyer purchasing a £425,000 property will pay nothing today and £6,205 in stamp duty land tax (SDLT) from 1st April 2025 when stamp duty rates return to previous levels
The impact of this change will be the greatest in Southern England*, with first-time buyers in London, the South East and the East of England most affected
The London Boroughs of Camden, Hammersmith and Fulham, and Islington will see stamp duty increase by an average of £15,000
Zoopla’s data indicates that many first-time buyers have been capitalising on the reduced SDLT rates and improvements in mortgage rates, with a 20% increase in first-time buyer demand in July 2024, compared to the same period in 2023
Under embargo until 00.01 Thursday, 12th September 2024, London: Research** from Zoopla, one of the UK’s leading property websites, has revealed that first-time buyers in England have just two months left to benefit from reduced stamp duty rates, with the average property sale taking 25 weeks from listing through to completion.
Thousands of first-time buyers benefited when stamp duty rates were temporarily reduced in the infamous 2022 mini budget. Stamp duty rates will return to their previous thresholds from the 1st of April 2025, assuming no further changes are announced in the Autumn Budget.
As a result, the number of first-time buyers liable to pay SDLT will increase as the nil-rate threshold reduces from £425,000 to £300,000. First-time buyers purchasing homes priced between £500,000 and £625,000 will also lose their eligibility for first-time buyer relief. These changes mean a third of first-time buyers in England will pay more stamp duty from April next year than they do today.
Southern England disproportionately affected
Stamp duty remains essentially a tax on moving home in Southern England, with 81% of total SDLT receipts coming from Southern England***. From the 1st of April 2025, the average first-time buyer in London will face a stamp duty bill of £5,600, £1,390 in the South East and £1,040 in the East of England compared to £0 today. In some areas of London, first-time buyers could pay an additional £15,000 in stamp duty once the planned changes come in and there is no change announced in the Autumn Budget.
Table 1: The most affected local authorities in Southern England
Region | Local Authority | Avg house price FTBs are looking to buy | Current FTB stamp duty bill | FTB stamp duty bill from 1 April 2025 | Difference in £ |
London | Camden | £622,500 | £9,875 | £24,875 | £15,000 |
Hammersmith & Fulham | £550,000 | £6,250 | £21,250 | £15,000 | |
Islington | £525,000 | £5,000 | £20,000 | £15,000 | |
South East | Elmbridge | £450,000 | £1,250 | £7,500 | £6,250 |
Epsom and Ewell | £425,000 | £0 | £6,250 | £6,250 | |
Windsor & Maidenhead | £425,000 | £0 | £6,250 | £6,250 | |
East of England | Hertsmere | £450,000 | £1,250 | £7,500 | £6,250 |
Three Rivers | £435,000 | £500 | £6,750 | £6,250 | |
Cambridge | £425,000 | £0 | £6,250 | £6.250 |
Lower mortgage rates have reduced the average monthly mortgage repayment from £1,076 12 months ago to £979 today for a typical first-time buyer home. First-time buyers in the South East and East of England buying ahead of the stamp duty changes will save close to one month's worth of mortgage payments in SDLT, whilst those in London could save the equivalent of 3.5 monthly mortgage payments.
Just 5% of first-time buyers in Northern England and the Midlands affected
Due to lower property prices, the vast majority of buyers in the North of England and the East and West Midlands will be unaffected by the changes on the 1st of April 2025. Around 95% of first-time buyers within these regions are currently looking for homes priced below £300,000 and therefore will not be impacted by the incoming changes.
This is due to the average house price in the majority of areas within these regions sitting below the FTB stamp-duty threshold of £300,000. For example, the average house price in key cities including Manchester (£226,600), Leeds (£209,800), Birmingham (£211,000), Newcastle (£154,900) and Liverpool (£159,600) sit well below £300,000.
Izabella Lubowiecka, Senior Property Researcher at Zoopla comments: “Thousands of first-time buyers have benefitted from the relief in stamp duty introduced in 2022. With just two months to go, those looking to purchase their first home should act this Autumn if they are to avoid paying more in stamp duty, particularly if they are looking to purchase a home in Southern England, an area where first-time buyers are likely to see a sizable increase in SDLT once the changes come into effect next April.
“Those not looking to purchase until after 1st April, should make sure they build the additional stamp duty fees into their plans and account for it in their overall budgets.”